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UPDATED 22/1/07

Valuation of Chaco Resources : 'Rule of Thumb' based on 550m shares and using 10% DCF on oil at $60/barrel is 1p on the sp for every 1m barrels (CHP's share) that is proved. Until oil reserves are proven the 1p/1m barrels will be discounted by the market.

Chaco Resources now has three exploration blocks in Colombia and three areas in Paraguay. The next year should see a steady news flow as it establishes the companys transformation from being an exploration company only to also becoming a significant oil production company. Set out below are some of the milestones which should produce announcements and have a positive effect on the share price. All reserves are quoted in recoverable oil assets.



Alea, Colombia :

25% interest in a field currently assessed at holding 38.1m barrels of light sweet crude oil. Drilling of the field by the operating partner, Ecopetrol, was programmed for 2006 to provide early cash flow, but a shortage of drilling rigs, then the rainy season and increased environmental requirements have caused a re-think and it is now expected that this block will be drilled in first half 2007.The proposal to drill a step out well as part of that drilling programme will also provide the opportunity to establish if the estimate of recoverable oil should be increased. (Some estimates suggest the field contains as much as 70m barrels.)

RNS : Updated w/c 30/4//07. Drilling contract should be imminent but actual drilling unlikely to take place second half 2007.



Puerto Lopez, Colombia :

54% Interest in a field containing light sweet crude oil.On 3.10.06 CHP announced that the original TEA area had been extended by the ANH to include further territory which it is expected will greatly increase the potential to find and exploit a structure which may contain as much oil as there is believed to be in Primavera, where Hardman and Co estimate that there is a potential value of 120p per CHP share.

RNS :Updated 22/1/07. Further seismic now obtained and decision not to proceed made because closures too small to be economic and drilling funds earmarked for this project now being retained for use on a more prospective block yet to be announced



Primavera west, Colombia :

55% interest. Two shallow drills in April turned out to be dry. Areas adjacent to this block contain oil (Cana Limon, also in the Mirador basin, the largest oilfield so far, 1.8b barrels) Chaco believe that the area in their block contains the thicker end of a wedge shaped oil-bearing sandstone structure; the area to the east in the neighbouring block has been estimated as containing 400m barrels and the El Miedo oilfield, 8 kms.away has 325m barrels. ANH Contract signed w/c 8/5/06 (1 week sooner than forecast). GED are drilling their neighbouring block in February 2007; two of their targets may contain oil deriving from Chaco's area so some earlier cash flow may result.

RNS : The drilling programme has now been completed but the company has yet to say whether the block will be explored further or abandonned.

New block announced in April known as Tigra in the Magdelana Basin. CHP has a 48.75% interest. Believed to be very promising but company is doing 3-d seismic over the next 18 months with drilling projected in the following 16 months. (Timescales seem to be set to allow a lot of room for delays or speeding up if progress is easier than anticipated)



Curupayty Block, Paraguay :

1.39m hectares in north, close to Bolivia. Two wells previously drilled and both showed oil.

RNS : Expect partnership with larger producer.



San Pedro Block, Paraguay :

1m hectares in south-east. Previous drilling showed oil.

RNS : Expect partnership with larger producer.



Parana Basin, Paraguay :

Canindeyu block covering 1,789,000 hectares. Bordering Brazil. Oil field on Brazilian side already drilled. Chaco also expect to find oil and, at a deeper level, considerable quantities of gas. Chaco has obtained valuable historic seismic for re-evaluation.

RNS : Presidential Decree received 2/11/06.. Petrobras has announced its intention to increase substantially its effort to exploit Paraguay's hydrocarbons and has announced a farm-in on CDS's adjacent block. Possibility that they or another major will do likewise with CHP



Corporate Activity :

CHP obtained an independent evaluation of their exploration assets by Hardman and Co., during July 2006.This is updated monthly. As Chaco Resources line up their assets ready for production they may attract a bid. There are also other actions that the mgt. could take to increase the Chaco's asset share subject to negotiation since the position of the Colombian state oil company, Ecopetrol, is believed to be under review. Other actions could be taken which would have the attraction in bringing more resources to bear on a quicker timeframe plus help streamline the management of their assets. De-merging the Colombian and Paraguayan assets at an appropriate time might hold out some advantages to shareholders at some stage.
Last Placing announced at 15.1p per share on 18/5/06.
Chairman and FD bought shares 8/06 and the Chairman recently exercised his option on further shares which would suggest that he regards the share price to be going north from here on.
Updated 22/1/07.




Here are some dates for your diary courtesy of KJKelly, who posts on ADVFN

1. Curupayty - complete reprocessing of seismic by end July 06
2. Curupayty - complete interpretation of seismic by end August 06
3. Curupayty - decide whether to proceed to drilling or proceed with a farmout campaign - end September 06
4. Platanillo - commence re-entry of Alea 1 early in 1st quarter 2007
5. Primavera - two structural targets will be selected from 10 potential targets for drilling commencing Feb. 2007.
6.Hardman updates should now happen monthly.

SS,

I am not convinced that changing the board now would be the right thing to do. Only one thing matters at the moment: drilling holes in the ground to see if there is any of the black stuff and, if so, how much.

If they do find oil in commercial quantities, I am sure that they will find other organisations willing to 'assist' the company in exploiting same.

Don't agree Steve, not with your estimates, but with your timescales, I feel you may be out by a couple of weeks as interest burns towards middle of march. Time will tell and I'd be delighted if you were right of course.

Beau

Blackdown has it right ...... "Only one thing matters at the moment: drilling holes in the ground to see if there is any of the black stuff and, if so, how much."

Other than getting some excited, it matters between little and not remotely whether or not CHP's next door neighbour has hit a gusher or a medieval midden!

To get holes drilled in the ground they need good local mgt., (in sufficient quantity, not just JW) to drive the operator to perform, and in turn well-focussed London mgt. to ensure that JW has what he needs and that he does it. I'll come back to my checklist from time to time. Sometimes companies need grabbing by the scruff of the neck to move them fwds. and CHP looks like a classic candidate. They have the assets with the potential - and have had for a long time - GED have come to it later and beaten them to drilling.

Sharesure
As you understand it do we get a share of any oil found by GED?

Hold on a minute, the rig is late through no fault of Chaco, and we have a price drop and 40 posts criticising the board? I'm confused.

whats the problem every oil company encounters delays and its march next week?.

dont quite see the rush, H2 could mean June before spudding, only upward factor is a positive result from Ged nearby... these could just as easily fall back further...

what are you talking about bt ? they are spudding anytime from 1st march.
READ TODAYS RNS.

my apologies, i understood H1 to be April, May, June...

Beau on target so far

Blimey its a long time since the bid has been so high on large sells ,what does this mean anyone? Still learning the game.

Pisces, its telling me that someone wants whatever is available and they will be mopping up later.

It may have already been noted. I understand that the drilling of
Cachapa Well on the Primavera ( spanish for spring!!!) Block has
now been delayed from second week of Feb to first half of march Feb.

Looking at the trades today pretty surprised no red appeared.

level 2 looks interesting at the end of day. Not one MM has a price of 13.75p it goes from 13.5p to 14p. If we could get some more buys to take out the 13.5p we may jump straight to 14p. we done very well today.... the extra time may actually help the SP and give those who wanted to buy in/top up a chance. Someone has been buying, maybe Mr 800K is hungry for more...... May be the mops next buy price IS 13.75p,

by my reckoning, 14.5 is the next serious resistance, though that does not mean that level will be challenged in the immediate future .... in fact would expect some consolidation around this level as rsi is looking a bit toppy.

Re the delay - we seem to have swapped an uncertain Feb date for a more certain March date. Certainty is king, so the SP rises.

hardman report is out .

http://www.hardmanandco.com/Research/monthly/Feb_2007_Monthly.pdf

and it says, please?